Morning Commentary: Halozyme Therapeutics convertible notes on tap; UpHealth exchanges

By Abigail W. Adams

Portland, Me., Aug. 15 – The convertibles primary market saw an active start to the week with refinancing deals continuing to drive new deal activity.

Halozyme Therapeutics Inc. plans to price $500 million of six-year convertible notes after the market close on Monday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be marketed with assumptions of 300 basis points over Libor and a 38% vol.

Using those assumptions, the deal looked about 3 points cheap at the midpoint of talk, a source said.

The deal is a refinancing.

In addition to repurchasing up to $200 million in common stock and repaying its outstanding $250 million term loan facility due 2026, Halozyme will exchange a portion of its outstanding 1.25% convertible notes due 2024 for cash and shares in privately negotiated transactions.

The 1.25% exchangeable notes changed hands at 180.5 early Monday, according to a market source.

Meanwhile, UpHealth Inc.’s 6.25% convertible notes due 2026 were active in the secondary space after the global digital health company announced a refinancing transaction.

UpHealth privately placed $67.5 million of three-year variable-rate convertible secured notes on Monday with proceeds to be used to repurchase $45 million of its 6.25% convertible notes due 2026.

The new variable-rate convertible notes will accrue interest at a rate equal to SOFR plus 900 bps with the minimum interest rate 10.5% and the initial conversion premium 101%, according to a company news release.

“This was an interesting exchange,” a source said.

The 6.25% convertible notes were trading at par early in Monday’s session.

There was $9 million in reported volume.

UpHealth’s stock was trading at 80 cents, a decrease of 7.03%, shortly before 11 a.m. ET.

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